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HomeMy WebLinkAbout10/12/2023 - Energy Board - Agenda - Regular Meeting ENERGY BOARD REGULAR MEETING October 12, 2023 – 5:30 pm 222 Laporte Ave – Colorado Room Zoom – See Link Below 1. [5:30] CALL MEETING TO ORDER 2. [5:30] PUBLIC COMMENT 3. [5:35] APPROVAL OF SEPTEMBER 14, 2023 MINUTES 4. [5:45] 2024 RATES & FEES (Decision, 30 Min.) Randy Reuscher, Lead Analyst, Utility Rates 5. [6:15] DEMAND RESPONSE BUSINESS UNIT 2024 BUDGET REVISION (Decision, 45 Min.) Brian Tholl, Energy Services Supervisor Pablo Bauleo, Senior Energy Services Engineer 6. [7:00] DRAFT 2024 WORK PLAN (Discussion, 45 Min.) 7. [7:45] BOARD MEMBER REPORTS (5 min.) 8. [7:50] FUTURE AGENDA REVIEW (5 min.) 9. [7:55] ADJOURNMENT Participation for this Energy Board Meeting will be in person in the Colorado Room at 222 Laporte Ave. You may also join online via Zoom, using this link: https://fcgov.zoom.us/j/96707441862 Online Public Participation: The meeting will be available to join beginning at 5:15 pm, October 12, 2023. Participants should try to sign in prior to the 5:30 pm meeting start time, if possible. For public comments, the Chair will ask participants to click the “Raise Hand” button to indicate you would like to speak at that time. Staff will moderate the Zoom session to ensure all participants have an opportunity to address the Board or Commission. To participate: • Use a laptop, computer, or internet-enabled smartphone. (Using earphones with a microphone will greatly improve your audio). • You need to have access to the internet. • Keep yourself on muted status. ENERGY BOARD September 14, 2023 – 5:30 pm 222 Laporte Ave – Colorado Room ROLL CALL Board Members Present: Bill Althouse, Thomas Loran, Marge Moore, Alan Braslau, Jeremy Giovando, Brian Smith (remote) Board Members Absent: Vanessa Paul, Bill Becker OTHERS PRESENT Staff Members Present: Christie Fredrickson, Phillip Amaya, John Phelan, Cyril Vidergar (remote), Brian Tholl, Katherine Bailey (remote), Michael Authier, Kendall Minor (remote) Members of the Public: MEETING CALLED TO ORDER Chairperson Tenbrink called the meeting to order at 5:30 pm. ANNOUNCEMENTS & AGENDA CHANGES None. PUBLIC COMMENT None. APPROVAL OF MINUTES In preparation for the meeting, board members submitted amendments via email for the August 10, 2023, minutes. Board members requested additional language be added from their discussion to reinforce the concerns about Platte River’s Integrated Resource Plan falling short of the community’s renewable electricity and energy goals. STAFF REPORTS Community Wide Solar Visualization John Phelan, Energy Services Manager & Energy Policy Advisor Rhonda Gatzke, Senior Energy Services Engineer More than 3,000 Fort Collins Utilities residential and commercial customers generate solar power. Utilities partnered with Colorado State University (CSU) to create a visual representation of the estimated total power that grid-connected photovoltaic (PV) systems make each day. The Community Wide Solar Visualization tool, which is for educational purposes and open to anyone, shows near real-time (five- minute intervals) total power generation by grid-connected PV systems. CSU developed the model, called PVSTEM; it captures a variety of data from each solar system in Utilities’ service area and combines it with information from three CSU weather stations around Fort Collins. The data includes capacity (kW-dc), orientation (tilt and azimuth), location, installation date, sunlight intensity, temperature, wind speed, and snow coverage. The model also considers any power ENERGY BOARD REGULAR MEETING losses that happen due to shading, system downtime (assumed repairs, maintenance, or power outages) and system ageing. Finally, it creates a graph to display the estimated total solar power output. The data will initially be used educationally by people in the solar industry or anyone who’s interested, but over time, Utilities may use the information to support its work to reach the community’s Our Climate Future energy and grid flexibility goals. Board member Althouse asked if it is possible to calculate how much was generated and how much was pushed back onto the grid. Mr. Phelan said that data can’t be timestamped, but it can be calculated on an annualized or quarterly basis. Mr. Althouse asked if the Utility can see when a meter is injecting into the grid, and Mr. Phelan said yes, approximately six hours later that data becomes visible to the Utility. Mr. Althouse asked if there is any way to assess the total localized capacity. Staff said in real time or near- real time, no, but otherwise yes, the data can be pulled from the Meter Data Management System. Board member Braslau said he would find it interesting if this tool could be used in site-specific situations, such as individual buildings and then have the real time data displayed. BUILDING PERFORMANCE STANDARDS UPDATE Brian Tholl, Energy Services Supervisor Katherine Bailey, Project Manager A Building Performance Standards (BPS) standard is a policy that requires building owners to meet performance targets by actively improving their buildings over time. In Fort Collins, BPS aligns with the Our Climate Future Plan (OCF) through Big Move 6: Efficient, emissions free buildings, the end goal being that everyone in our community lives and works in healthy energy and water efficient buildings, which transition to become emissions free. OCF implementation intensifies the community efforts to achieve these three primary environmental goals: Reduce 2030 greenhouse gas emissions by 80% below 2005 baseline levels, 20% reduction in forecast electricity use by 2030, and 10% reduction in forecast natural gas use by 2030. Board member Loran asked for additional clarification on the phrase “forecast electricity use,” because if the community is moving toward electric vehicles and heat pumps, won’t electric utilization skyrocket? Anecdotally, Mr. Loran said he has electrified much of his home and lifestyle and his natural gas utilization has stopped. Mr. Tholl said included in the forecasted electric use is population growth, building stock, as well as a high-level percentage of electrification (both demand and energy). Mr. Tholl explained that implementing BPS is the most impactful, mitigation-based, direct action the City can take to reduce emissions by 2030. Currently, two thirds of community carbon emissions come from the existing building stock in the community. The 2030 impact of implementing BPS is projected to be just under that of all other efficiency programs combined. The estimated impact of BPS is 132,500 metric tons of carbon dioxide equivalent (MTCO2e), while all other efficiency programs are estimated at 184.3k MTCO2e. Mr. Tholl also noted that BPS has a much higher natural gas impact than other Utilities programs. Ms. Bailey explained the BPS Task Force is comprised of industry experts who represent industries that would be significantly impacted by BPS, such as affordable housing, multifamily housing, small business owners, commercial real estate, etc. The Task Force is not meant to be comprised of technical experts, there is an entire technical committee who does the deep dive and supports the task force with the needed data. When talking about building performance, we are not just talking about efficiency, but we’re ENERGY BOARD REGULAR MEETING talking about equity, safety, health, resilience, reduced energy burden, and trying to prevent increased unaffordability. Ms. Bailey said the Task Force’s recommendations will not be finalized until November, but they have identified some “emerging recommendations.” These recommendations can provide a sense of direction in the three main bodies being discussed: Covered Buildings, Efficiency Targets, and Resources and Off Ramps. In the Covered Buildings category, the emerging recommendations are to include buildings 5,000 square feet and above multifamily and commercial (also covered under the City’s Benchmarking Ordinance). The definition of multifamily will also align with the benchmarking ordinance (R2 occupancy and three stories or greater). This group feels strongly that they don’t want any buildings to have to adhere to different sets of requirements, so there won’t be any overlap with the State’s requirements or compliance. The Task Force would like to give further consideration to industrial properties with the assistance of experts in that space. New construction will be included. Additionally, they are considering a cohort of small buildings (5- 10k sq ft) with more achievable targets. Under Efficiency Targets, the task force is potentially looking to recommend Energy Use Intensity (EUI) targets with both interim and final goals (set for 2027 and 2030), and there is potential for a secondary greenhouse gas intensity target to align with the State. The group wants to emphasize the necessity for maximum flexibility in the pathway options (caps, electrification, renewables) rather than prescriptive pathways. Board member Braslau commented that the opposition to the prescriptive pathway is likely a reflection of the composition of the task force; if it included more diverse experts, the opinion may have been more nuanced. He doesn’t believe the community will or can meet its climate goals without prescriptive pathways. Ms. Bailey said she appreciates that feedback and noted that the technical committee will still need to review all the recommendations and could advise alternatives (such as a prescriptive pathway). The Task Force felt strongly that the more resources are available, the more successful this initiative will be. Their recommendations for Resources and Off ramps include both technical and financial resources, such as a Building Hub (a one stop shop website for contractors, assessments, etc.), Technical Support, incentives, and community engagement. Adjustments should also be available for timeline and targets for special circumstances, such as supply chain disruptions, historic designations, etc. The Task Force wanted to keep the definition of Equity Priority Buildings (additional assistance provided to under- resourced buildings) very high-level so as to not unintentionally exclude anyone who may need assistance. Mr. Tholl added that if the Board has feedback on any of these recommendations, staff would like to hear so they can pass that on to all stakeholder groups. Ms. Bailey quickly reviewed building size cohorts; the task force is considering cohorts of 5-10k square feet versus a cohort of 5-15k square feet, as well as the consideration if small buildings should even be included (a cut off at 10k or 15k square feet). There is savings potential and the alignment with the City’s benchmarking data, but there is a significant administrative burden because of the number of buildings. It is a lot of buildings for a small amount of savings. Board member Loran which one of these options will get the community closer to the climate goals. Ms. Bailey said there are a few ways to look at it because the most energy savings will be collected if there is ENERGY BOARD REGULAR MEETING not a small building cohort, but without one it may be necessary to have a lower standard/target, so it is achievable for everyone (because it is more challenging for smaller buildings). Mr. Tholl added this is a larger discussion happening among their stakeholder groups and there is a lot to consider beyond just the energy savings, such as administrative burden (for both City staff and building owners) versus what can be achieved by putting a standard in place. Board member Moore is a commercial real estate appraiser; she works often with small building owners and has also been involved with securing CPACE (Commercial Property Assessed Clean Energy) funding. She said she thinks staff is correct in their thinking that the ability to fill the in between gap at a lower interest rate will be more difficult for smaller buildings. The return on investment may not pan out in energy savings. Mr. Tholl said the City is unique because of the option to participate in the Efficiency Works Buildings program that has a lot of incentive options and a body of work and data to support this program. Board members wondered what the timeline is like before making the choice. Ms. Bailey said staff can prepare different options along with pros and cons of each and bring them to Council. She said ideally the technical committee will narrow down the compliance pathways a little bit more. Board member Moore wondered if it would help to do a staggered implementation. Ms. Bailey said because we are working to achieve aggressive climate goals by 2030, it would be a detriment to those building owners to roll out the standards and give them less time to complete the work. Board member Braslau suggested including all eligible buildings and allocating more resources to smaller building owners. Board member Smith said it seems like the prescriptive paths may be more appropriate for smaller building owners and wondered if the task force had explored that. Ms. Bailey said the task force had a robust discussion around this and ultimately, they felt strongly that if they had enough tangible and achievable goals, as well as a wide range of resources available to them (technical and financial) then they should be able to choose the best way to achieve their targets that aligns with their own business plans. Staff asked the board to advocate for BPS not as an if, but a how and encouraged them to help Council understand the why. It is a high impact process which means it is likely to be met with high resistance and viewed as high risk. Board members noted that many people are very supportive of climate action but weary of entering a regulatory space. They also discussed drafting a memo expressing their excitement and eagerness to hear and learn more. RENEWABLE ENERGY METRIC DEFINITIONS John Phelan, Energy Services Manager & Energy Policy Advisor The goal is to ensure a common understanding of renewable electricity (RE) and electricity carbon accounting structure for Fort Collins currently and in a future electricity market, which will better inform discussions by community leaders (and the community at large) regarding Our Climate Future specific goals, as well as other community interests and priorities. Heading into the discussion, Mr. Phelan asked the board to consider what they are most curious about and what details would improve their understanding. The bottom line of tonight’s discussion is that RE accounting methods stay the same today and in the market, but it is necessary to overhaul how it is described. The basics for current and market accounting are that the Utility purchases all its electricity from a single provider, power sources and RECs (renewable energy credits) are accounted for on an annual basis, and then Fort Collins calculates RE percentages and electricity carbon based on standard protocols for each. Mr. Phelan emphasized that the more the Utility generates locally, the less the Utility needs to purchase. The current goals are based in standard ENERGY BOARD REGULAR MEETING accounting mechanisms and protocols, and they do not represent the electric system or electricity market operations. Mr. Phelan reviewed how the Utility currently works with Platte River, and how it will change with Platte River’s entry into a regional transmission market. He pointed out a few things to keep in mind: Platte River meets City loads, and their resource planning is for City loads. The net revenue from the region offsets the wholesale rates, and the REC accounting for City goals is a bundled REC, meaning that the Utility gets the electricity from non-carbon generation delivered to the City as well as the REC. Chairperson Tenbrink asked who owns the RECs from residential solar. Mr. Phelan said if the Utility issues a rebate, then the Utility owns the REC, but if there was no rebate then the customer owns it. Once Platte River enters the market, all Platte River generation will go to the market, and all the Utility’s electricity will come from the market. There is no direct sale from Platte River to Fort Collins. The market will now meet the City loads, but Platte River is still doing the same resource planning. The market revenue offsets the market costs, so if Platte River doesn’t generate anything, then the Utility pays the cost from the market, but since they sell into the market, the revenue they generate from the sale is a benefit to the Utility (provided the market purchases what Platte River generates). Now all RECs are unbundled from an asset that the Utility is an owner of, so the Utility will own a portion of that REC. Board member Braslau asked for clarification if Platte River will be purchasing anything from the market, and Mr. Phelan said no, Platte River plans only to sell into the market. Board member Althouse asked if there is a situation here like there was in Texas a few years ago and the cost surges to $5,000 a MW, will the Utility’s customers be responsible for that. Mr. Phelan said that is a potential risk, yes, but the Texas market (an Energy Only market without capacity requirements) is structured very differently than the Southwest Power Pool, which has a lot more guard rails. Mr. Amaya said where the Utility could get into trouble is if we were to ever lose our generation resources because we’d be vulnerable market pricing; however, in that situation that would be true now and we’d be purchasing from the spot market or possibly lose power all together. Board member Loran said since the margin on cost of renewable energy is zero, and he wondered what happens when the demand is met, and everyone is trying to sell a product at zero or negative. Mr. Phelan said that his expertise is not in markets, but if the Board would like time to ask more questions, staff can invite Platte River to come to a future meeting as subject matter experts. Mr. Minor said holistically, the decision to enter the market is a hedge and a safety net. From a wholesale and reliability perspective, the Utility is positioning itself to be able to serve the community regardless of load generation. When the cost goes to zero or negative, we are subject to that pricing even if it’s not beneficial to the community; however, if we have a positive cost in the market and it is cheaper to buy than it is to produce, then that decision is made from the operations desk. There are pros and cons based on pricing signals is day ahead or real time. Additionally, all the renewable energy is intermittent so that is always what is on the grid first, so it needs to be utilized first. Mr. Phelan recapped a few key points to remember going forward: The Utility’s electricity will come from the market (SPP RTOW; not from Platte River). The Utility is part owner of a generation agency that sells electricity into the market. Renewable electricity has always been tracked via RECs, and RECs from Platte River (owned generation or PPA’s) are the Utility’s to account for annualized renewable electricity and carbon goals. Local solar reduces Utility purchases and counts towards the City’s renewable electricity goal. OCF RE and carbon goals are based on standard annualized reporting methods. Platte River’s reporting under the Clean Energy Plan has a different purpose; while it’s important it’s not ENERGY BOARD REGULAR MEETING reflective of the City’s goals. This is confusing and staff would like the Board’s feedback on how to make this clearer to the community. Platte River forecasts generating more RE annually than the owner community’s load by 2030. Together, these mean the community can meet its OCF electricity goals with Platte River’s current planning (Platte River’s Clean Energy Plan forecasting is only indirectly related to City goals), and the Utility’s RE and carbon goals are not reflective of electric system and market operations. Chairperson Tenbrink commented that he does really care where the RECs are coming from or going to, as long as we enough energy here so we can keep natural gas plants or other similar things out of the area, so we can breathe clean air and our kids and grandkids can breathe clean air. Mr. Phelan said the current goals of the OCF may not address those concerns, and he asked the Board to consider how do we collectively talk about that in a way that leads to a productive conversation. Mr. Minor asked the Board what is the reliability source of energy that we need to replace now closed coal fired sources. Think about what we will need when the sun isn’t shining and the wind isn’t blowing. Mr. Amaya also asked the Board to consider how do we keep people alive in those situations should they arise during winter, knowing that fireplaces and woodburning stoves are also discouraged or no longer installed. What is the resource when we don’t have enough local resources to sustain the community. Board member Loran said until long-term battery storage becomes widely available, something like an offline gas turbine system, so that in the event of a dark calm event, there is power there. It would be wise to look at it from perspective of three different situations, short term storage, long term storage, and in- case-of-emergency. The whole idea is to burn as little as possible to make electricity, but there will be times when we need to be prepared for emergencies. Board member Althouse asked what technology might be on the shelf in five years when money is being invested today. Mr. Amaya said the if Platte River creates a Natural Gas plant, they are looking into making it a dual fuel system. Though hydrogen and biofuel are not viable fuel sources right now (because the resources needed don’t readily exist here), but we may get there sometime in the next five years. Board members seemed to express that they like what they are hearing, though they emphasized they still have many questions about it now and for the future. BOARD MEMBER REPORTS None. FUTURE AGENDA REVIEW The Board will begin drafting their 2024 work plan at their next meeting and spend additional time working on it at their October Work Session ahead of the approval due in November. The Board will also hear presentations on the 2024 rates and fees, as well as a demand response business unit budget revision. ADJOURNMENT The Energy Board adjourned at 8:34 pm. Energy Board Agenda Item Summary – City of Fort Collins Page 1 of 7 October 12, 2023 AGENDA ITEM SUMMARY Energy Board STAFF Randy Reuscher, Lead Rate Analyst Lance Smith, Director of Finance, Planning & Analysis SUBJECT Items Relating to 2024 Utility Rates, Fees, and Charges EXECUTIVE SUMMARY The purpose of this item is to consider Ordinances related to proposed 2024 rates , which are included in the 2024 City Manager’s Recommended Budget, being brought forward for Council consideration on October 17, and Utility Fees for Council consideration on November 21. All proposed rates and fees would become effective on January 1, 2024, including the following items: • Monthly utility charges to increase 5% for Electric customers, 4% for Water customers, 4% for Wastewater customers, and 3% for Stormwater customers • Development Fees - adjustments to development fees including 14.8% for Electric Capacity Fees (ECFs), 5.7% for Water Plant Investment Fees (PIF), 4.1% for Wastewater PIFs, and 7.0% for Stormwater PIFs. STAFF RECOMMENDATION Staff recommends adoption of the 2024 Utility Rates and Fees as presented. BACKGROUND / DISCUSSION Proposed Changes to Monthly Utility Rates The revenues needed to support the ongoing operation and maintenance costs of providing each of the four essential services to customers are collected through monthly utility rates. As costs change over time it is necessary to adjust rates to reflect those changes. Long-term financial planning is important to ensure revenues are adequate and reserves are available to maintain and replace infrastructure in a timely fashion to continue to provide high quality and reliable services to our customers. Frequent review Energy Board Agenda Item Summary – City of Fort Collins Page 2 of 7 and updating of the cost-of-service allocation models behind the monthly utility rates maintains equity across rate classes and helps to reduce the impacts on customers of higher utility rates by providing gradual, modest rate adjustments over time rather than less frequent and larger rate adjustments . These actions help ensure the delivery of current and future utility services occurs in a fiscally responsible manner, balancing both costs and levels of service with affordability and prudent planning and investments. A summary of the proposed rate increases for the four utility services are shown in the table below. These increases are included in the 2024 City Manager’s Recommended Budget. Electric Staff is proposing a 5% retail rate increase for the electric fund in 202 4. This increase is driven by a combination of a 5% increase in wholesale electric expenses in 2024, as well as an increase to cover distribution operating & maintenance costs and investments in capital projects. Roughly two-thirds of costs incurred each year to provide electric service are attributable to wholesale expenses, while the other one-third is attributable to costs related to operating & maintaining the distribution system. Energy Board Agenda Item Summary – City of Fort Collins Page 3 of 7 Staff has updated financial models to better understand future needs related to growing costs around operating and maintaining the distribution system, including the cost of capital projects. The outcome shows a need for a rate increase to cover future operating and maintenance costs and to continue to invest in updating the system for continued reliability and resiliency. The portion of the proposed 5% increase that is not applied to wholesale cost increases will be used to help fund the distribution system needs. There are multiple capital projects necessary to meet future needs, some of which include feeder cable and transformer replacements, streetlighting upgrades, distribution automation, and demand response technology upgrades. Staff is also in the process of reviewing requirements and going out for RFP for upgrading the utility billing system, which will occur over the next couple years. Platte River Power Authority is planning to increase their wholesale blended rate ($/MWh) by 5% in 2024. There is variability in how the increase is applied to individual component charges . The owner community charge (1.3% decrease) and transmission charge (0.6% decrease) will be slightly lower than 2023. The generation demand charge will increase 7.5% during the summer months and 7.0% during the non-summer. The fixed energy charge will increase 6.0% and the variable energy charge is increasing 6.8%. The current rate forecast for the electric fund is shown here: Fort Collins Utilities participates in the Colorado Association of Municipal Utilities (CAMU) survey each year. Below are the residential electric rate comparisons for the electric utilities in Colorado that responded to the survey. Fort Collins is shown in the maroon-colored bar within the graph. Based on the July 2023 survey, Fort Collins Utilities came in towards the lower end of average cost within the state, assuming 700 kWh of consumption in a month, at $89.65, or 7 th lowest overall. Energy Board Agenda Item Summary – City of Fort Collins Page 4 of 7 The table below shows the impacts of the proposed rate change to the average residential monthly bill. Under the proposed rate changes, a residential customer’s total utility bill , for a customer receiving all four municipal utility services, would increase by 4.3%, or $8.35 per month. The table below compares typical residential electric, water, wastewater, and stormwater monthly utility bills across neighboring utilities along the Front Range, based on proposed 2024 charges. In 2023, Fort Collins Utilities is the lowest for all four services. With the 2024 proposed increases, Fort Collins will remain lowest at $201.57, as there are known increases proposed amongst other utilities, as well, with some of them being substantially higher than the percentage increases proposed for our community. Energy Board Agenda Item Summary – City of Fort Collins Page 5 of 7 Proposed Changes to Development Fees Development fees are the mechanism for Utilities to recover the impact of adding new demand to the services Utilities provides, including electric, water, wastewater, and stormwater. Plant Investment Fees (PIFs) and Electric Capacity Fees (ECFs) are one -time charges for new development or re -development. These fees recover costs for excess capacity of infrastructure already in place to serve new customers based on the “buy-in” approach, where customers pay according to new demands they will put on the system and considers incremental costs of future infrastructure to serve them. Staff updates development fee models every two years. In alternating years, when models are not updated, an inflationary adjustment is applied to utility development fees. Staff uses the Engineering News Record (ENR) construction cost index to apply adjustments. For 2023, staff increased development fees, including the Electric Capacity Fees, Water Plant Investment Fees, Wastewater Plant Investment Fees, and Stormwater Plant Investment Fees, by 9%. Each model was updated this year to capture current inputs, including current escalation factors and each of the various drivers such costs, consumption, and future system needs. Utilities has experienced very high cost increases with various items, particularly on the electric side with purchases such as electric transformers, which have Energy Board Agenda Item Summary – City of Fort Collins Page 6 of 7 increased substantially due to supply chain issues and higher material costs. The table below shows the proposed increase for 2024 for each of the development fees by fund. Utility Fee Unit of Measure 2024 Proposed Increase Electric Capacity Fee (ECF) $ / kW 14.8% Water Plant Investment Fee (PIF) $ / GPD 5.7% Wastewater Plant Investment Fee (PIF) $ / GPD 4.1% Stormwater Plant Investment Fee (PIF) $ / acre of development 7.0% There are many variables in calculating the average impact to a development, particularly between residential and commercial. Shown in the table below is an example of a single -family residential house receiving all four services from Fort Collins Utilities. The 2023 amount is expected to increase by approximately $790 in 2024, from $11,120 to $11,911. This equates to an overall increase of 7.1% for these one-time fees. Utilities Affordability Portfolio Utilities staff are proposing improving access to the City’s Utilities affordability programs. In November 2022, Council requested that staff review affordability programs to ensure they are accessible to the target audience, to reduce barriers to apply, and to add additional ways for customers to apply for the Income - Qualified Assistance Program. Energy Board Agenda Item Summary – City of Fort Collins Page 7 of 7 This program was adopted by Council in 2022. Currently, customers who are approved through the state’s Low-income Energy Assistance Program (LEAP) are automatically enrolled in IQAP. While most customers who meet the income requirements are eligible to app ly for LEAP, there are two populations that have been identified who are either not eligible to receive LEAP even though their income is within approval range, and those who may not be able to take advantage of the program due to additional household assistance they receive. Customers impacted are those where the household has members who are not documented U.S. citizens, and renters who have a Housing Choice Voucher (formerly Section 8) where heat is included in their rent. Providing alternative entry poin ts for these customers who have Fort Collins Utilities in their name will allow them to access IQAP, separate from LEAP, while maintaining an income verification process. We are currently anticipating approximately 400 households impacted by this update. These changes would require amending Sec. 26 -724.b, Sec. 26-724.c, and Sec. 26-724.e to remove the LEAP enrollment requirement. As of August 2023, 1,636 customers were enrolled in IQAP. The average discount customers receive is $240 per year. Due to fluctuations in the number of customers enrolled, the cost to Utilities has been approximately $393,000 to $415,000 per year. Increasi ng the number of participants to 2,000 could increase the annual cost to Utilities to approximately $480,000. 2Action Requested Does the Energy Board support the proposed changes to 2024 electric utility rates and fees? 3 Monthly Utility Rates 42024 Utility Rates UTILITY 2024 PROPOSED INCREASE ELECTRIC 5% WATER 4% WASTEWATER 4% STORMWATER 3% Electric increase includes proposed 5% PRPA increase for wholesale expense, with the remainder covering distribution system increases 52024 Utility Rates 62024 Utility Rates 72024 Utility Rates 8 Utility Development Fees 92024 Development Fees Utility Fee​2024 Proposed Increase​ Electric Capacity Fee (ECF)​14.8%​ Water Plant Investment Fee (PIF)​5.7%​ Wastewater Plant Investment Fee (PIF)​4.1%​ Stormwater Plant Investment Fee (PIF)​7.0%​ 102024 Development Fees 1 1 Utilities Affordability Utilities Affordability 12 •Neighbor to Neighbor •Rent and Utility Assistance •Payment Assistance Fund •Electric and water assistance •Income-Qualified Assistance Program (IQAP) •Reduced electric, water and/or wastewater rate •Proposing alternate entry for customers with a housing voucher and households with members that are not documented U.S. citizens •Medical Assistance Program (MAP) •Reduced electric rate due to medically necessary device •Larimer County Conservation Corp (LCCC) •Home efficiency upgrades •Colorado’s Affordable Residential Energy Program (CARE) •Weatherization and energy efficiency upgrades •Weatherization Assistance program (WAP) •Weatherization and energy efficiency upgrades for electric customers Emergency Assistance Seasonal & Monthly Assistance Efficiency Upgrades Utilities Affordability 13 •Neighbor to Neighbor •Overall Benefit: $176,911 •Number of Customers: 726 •Average benefit per month: $244 •Payment Assistance Fund •Overall Benefit: $161,600 •Number of Customers: 574 •Average benefit per month:$282 •Income-Qualified Assistance Program (IQAP) •Overall Benefit: $333,987 •Number of Customers: 1,552 •Average benefit per month: $13 •Medical Assistance Program (MAP) •Overall Benefit: $29,546 •Number of Customers: 169 •Average benefit per month: $15 •Larimer County Conservation Corp (LCCC) *2021 •Overall Benefit: $118,025 •Number of Customers: 233 •Average benefit per month: $507 •Colorado’s Affordable Residential Energy Program (CARE) *2021 •Overall Benefit: $8,912 •Number of Customers: 3 •Average benefit per month: $2,971 Emergency Assistance Seasonal & Monthly Assistance Efficiency Upgrades 1 4Action Requested Does the Energy Board support the proposed changes to 2024 electric utility rates and fees? For More Information, Visit THANK YOU! fcgov.com/utilities Headline Copy Goes Here Energy Services Brian Tholl & Pablo Bauleo 2024 Budget Revisions: Demand Response Business Unit 10/12/2023 Headline Copy Goes Here 2 DERMS Alignment with OCF Strategic Objective: Environmental Health Our Climate Future implementation intensifies our community efforts to achieve these three primary environmental goals: 1.Reduce 2030 greenhouse gas emissions by 80% below 2005 baseline levels; 2.Bi-directional grid flexibility capacity of 5% of peak loads by 2030 Big Move 12: 100% Renewable electricity: Everyone in the community receives affordable and reliable 100% renewable electricity including from local resources Headline Copy Goes Here 3 What Are We Asking for Tonight? What additional questions does Energy Board have for grid flexibility programs? Does Energy Board support the proposed 2024 budget changes for grid flexibility programs? Headline Copy Goes Here 4 Grid Flexibility "Definition" & Benefits •Grid Flexibility is the ability to develop and utilize technology and systems to match community load with available resources for economic, distribution or carbon benefit purposes. •Benefits of Grid Flexibility •Reduces overall cost and extends assets lifecycle (cable, transformers) by managing peaks... and valleys! •Delivers financial opportunities in upcoming energy imbalance markets •Allows larger penetration of distributed generation in a feeder before upgrades are necessary •Defers distribution transformer upgrades (capital expense) •Accelerates decarbonization by matching consumption to renewables availability (i.e., no need to "curtail solar" as many Utilities in AZ and CA are doing) •Mitigates solar generation ramp on/off due to widespread installation of PV •Mitigates future morning winter peaks due to widespread use of heat-pumps Headline Copy Goes Here 5 Why 2024 Budget Revisions? •Total funding for the 2023 / 2024 budget cycle is not changing. •Two primary drivers for revised budget: •'23/'24 Grid Flexibility Protocol (IEEE 2030.5) budget offer not moving forward •Utilities' ability to connect directly to devices not supported by manufacturers •Grid Flexibility Request for Proposals •First procurement process since adoption of Our Climate Future adopted goals •Results in increased scope of services/deployment Headline Copy Goes Here 6 Offer 1.7 Grid Flexibility Communication Protocol •This offer intended the deployment of an IEEE 2030.5 Open Standard communication protocol platform •Funded at $200,000 in ‘23 and $50,000 in ’24 •Software platform to send/receive commands from inverters •PV and batteries •Open Standards-based •“Mix and Match” of make and models •Any manufacturer that supports the protocol, can participate •Detailed planning discovered a “Catch-22” •OEMs implemented the protocol in a cloud-based platform instead of at the inverter level •OEMs want to charge ongoing “usage fees” (ie a “toll”) to communicate with inverters Headline Copy Goes Here 7 Native-based Open Standard vs Cloud-based Open Standard Utility Inverter A Inverter B Inverter C Utility OEM A (cloud) OEM B (cloud) OEM C (cloud) Inverter A Inverter B Inverter C Inverter D Inverter E Inverter FIEEE 2030.5 communication IEEE 2030.5 communication Proprietary communication (API) Native-based Open Standards communication at the inverter level does not require ongoing fees to manufacturers One implementation is enough to communicate with all inverters Manufacturers “inject” themselves in the communication path to force the utility to pay ongoing usage fees Multiple implementations might be needed (one per manufacturer) adding to stand-up costs Headline Copy Goes Here 8 Revised Offer Summary Budget Offer Offer number Offer Type '23 Budget '24 Budget '24 Proposed Revised Scope Base offer 1.3 ongoing $ 860 $ 900 $ 1,000 GIWH 1.8 capital $ 175 $ 355 $ 355 Connected EV 1.6 enhancement $ 100 $ 100 $ 150 Thermostats 1.9 capital $ 100 $ 100 $ 200 Grid Communications 1.7 enhancement $ 200 $ 50 ---- Totals $1,435 $1,505 $1,705 Individual actions: -Carryover majority of Grid communications offer into 2024 modified budget -End/close/terminate grid communications offer -Redistribute 2024 dollars across 3 remaining budget offers Headline Copy Goes Here 9 Additional Devices and Services •The extra funds would provide •Offer 1.9 "Thermostat upgrade" will deploy ~400 instead of ~200 units •Offer 1.6 "Connected EV" will enroll ~150 drivers, instead of about ~75 •Offer 1.3 "Base offer" will receive expanded software services (private cloud services, hosting, reporting analytics and advanced dispatch capabilities) in preparation for even larger deployments expected between 2025 and 2030 Device Type '23 status '24 target '30 target DI Thermostat 800 1200 3500 BYOT 300 300 1500 Electric Vehicles 15 165 300 GIWH 40 175 2000 Standard WH 2200 2200 2400 Residential Batteries ----300 Headline Copy Goes Here 10 Back to Original Questions What additional questions does Energy Board have for grid flexibility programming? Does Energy Board support the proposed 2024 budget changes for grid flexibility programs? Headline Copy Goes Here Headline Copy Goes Here 12 Estimated Grid Flexibility Budget •Assumes decompressing deployment to 7 years (Jan 24- Dec 30) •After reaching the goal, there are ongoing expenses ENERGY BOARD 2024 Work Plan - DRAFT 2024 WORK PLAN Page 1 DUTIES & FUNCTIONS (Sec. 2-106) The duties and functions of the Board shall be: (1) To advise the City Council and staff regarding the development and implementation of the City's energy policy; (2) To advise the City Council and staff in developing City policies that encourage the incorporation of energy conservation and efficiency, carbon emissions reduction and renewable energy into the development and provision of City utility services, the design and construction of City transportation projects, and the way in which the City impacts the overall built environment within the City; (3) To advise the City Council and staff regarding the alignment of energy programs and policies with City, ratepayer and community values and service delivery expectations; (4) To advise the City Council and staff regarding the recommendations for improvements to City energy systems; (5) To coordinate with other City boards and commissions regarding energy issues; (6) To advise the City Council and staff regarding budgetary, rate-making and operational matters related to the electric utility; and (7) To annually review and provide advice to City Council and staff on the City's Legislative Policy Agenda regarding energy and energy-related carbon issues. WORK PLAN Climate Emergency City Council gives the "Climate Emergency" as a priority. The use of this term implies of utmost importance and of highest urgency. The Energy Board agrees with this language and aims to advise Council on its implications: namely that Climate Action should guide all Council decisions and that all City actions, in particular the budget, should be viewed through the lens of impact on our region's Greenhouse Gas Emissions. Council should at the same time be focusing resources to increase community resilience to changes that will occur, regardless of meeting greenhouse gas emission goals. The resilience preparations should include energy generation and transmission, water supply, and critical infrastructure. – Functions (1, 2, 3, 4, 5, 6, 7) Implementing Our Climate Future (OCF) The Energy Board desires City Staff to develop plans that the Board could recommend to City Council, to: 1. Support Utilities to accelerate energy programs for efficiency, conservation, demand response, distributed generation and storage. Programs should increasingly focus on carbon emission mitigation, load shaping and grid flexibility while simplifying the customer experience. Ensure that opportunities span residential and commercial segments for both existing buildings and new construction. – Functions (1, 2, 3) ENERGY BOARD 2024 Work Plan - DRAFT 2024 WORK PLAN Page 2 2. Improve energy access support for low-income and historically underrepresented groups in the City through programs, including promoting increased customer participation, support levels, and pursuit of program longevity for the Income Qualified Assistance Program. – Function (4) 3. Support staff and Council with the implementation of strategies articulated in the City Council OCF Action Roadmap (October 2022), including emissions related to transportation and the built environment. – Function (2) 4. Address the impact of land-use policies on energy consumption and production including an examination of metro districts as well as the feasibility of energy districts. – Function (3) 5. Promote effective handling of variable and distributed sources and loads with the ongoing evolution of the Light & Power distribution system. This includes customer load flexibility, advanced distribution system management, and future energy market coordination. – Functions (4, 6) 6. Encourage and prepare for the electrification of transportation (electric vehicles of all types) and building systems (space heating, water heating, cooking and industry). This will include education for customers and trade allies, supply chain engagement, changes to codes and potential upgrades to distribution infrastructure, as well as grid management. – Function (2, 4, 5) 7. Accelerate the conversion of City-owned equipment from gasoline to electric; lobby the City to include electrification as a condition to award maintenance contracts, in particular in the elimination of 2- and 4- cycle gasoline powered equipment used by the City or by subcontractors in the maintenance of green spaces. Work with suppliers to stock and to promote electric rather than gasoline equipment. 8. Provide support for the implementation of Our Climate Future Next Moves related to Distributed Energy Resources (including but not limited to those which address battery storage, interactive demand response, housing, rate structures, energy codes, community solar, benchmarking and electrification). – Functions (2, 4, 5) 9. To seek advancement in transportation and building energy efficiency by steering code and policy at the City level and beyond to reduce energy consumption and emissions in current and future development – Functions (2, 3, 7) Cost of Service and Rate Structures Substantial changes in rate structures have occurred with time-of-day and income-qualified rates. More changes are coming as we consider new renewable energy options and future modifications to our solar net-metering rates. In addition, considerable efficiency gains both past and future suggest a new emphasis on cost of service, rather than just rates. It is important to evaluate how rates differentially affect customers across the City, such as low-income customers and those with electric homes. The Energy Board will work with City Staff to recommend rate structure changes. – Functions (2, 6) For Distributed Energy Resources (DERs), soft costs such as permitting and development fees, which may inhibit growth, should also be considered by the board. – Function (2) ENERGY BOARD 2024 Work Plan - DRAFT 2024 WORK PLAN Page 3 Diversity, Equity & Inclusion The Energy Board continues to promote diversity, equity, and inclusion on the Board, and to encourage the maintenance of a full Board with reasonable Board Member retainment period(s) that encourages stability, learning opportunities, and equal representation across the broad stakeholders within the community of Fort Collins. The Board follows the Fort Collins Respectful Workplace Policy and wishes to continue training opportunities for creating positive work environments so that all feel welcome, involved, and respected. – Function (3) Engaging Beyond the Energy Board on Related Topics The Board encourages heightened consideration of energy-related integrated topics, systems, and locations to develop solutions that meet the various needs within the community. In order to meet emission and electrification goals, engagement with other related City Boards, Platte River member owner communities, and relevant County and State-level representatives is important to enhance awareness, collaboration, and support. As such, board members are encouraged to attend other board meetings and to report on those proceeding at the monthly Energy Board meetings. Each Board Member brings a specific community understanding to the Board and is an important tool to give voice to diverse perspectives. Reinforces the need for equitable representation gender, status, race. – Function (5) Protecting Light & Power Assets & Customers Light & Power owns and operates an expensive electrical distribution system that needs constant maintenance. Much has been accomplished recently: The maintenance inspection and asset inventory plans, and the contact voltage survey are good examples. The Energy Board desires that Light & Power continue to review current procedures; make recommendations to maintain the reliability of the distribution system operation; to meet future growth; and sustainably manage energy assets. – Functions (4,6) Light & Power’s business model faces challenges from a transition to more distributed and renewable resources and ongoing energy efficiency and conservation savings. These actions provide benefits to the community and risks to the utility’s finances. – Functions (4, 6) Ongoing Responsibilities 1. The board wishes to be involved early and often in the Budget process, in order to make timely and effective recommendations on funding priorities. – Function (6) 2. Review and provide advice to City Council and staff on the City’s Legislative Policy Agenda related to energy issues. – Function (7) 3. Engage with and advise Fort Collins’s representatives on the Platte River Power Authority’s Board of Directors to continue the advancement of the City’s energy, climate, and air pollution goals, including a 100% renewable resource mix by 2030. – Function (3) 4. Other items that are brought before the board.